International Taxation & Tax Residency
Tax Residency in Canada
Individuals who are “resident” in Canada are taxed on their worldwide income. Individuals who are not “resident” in Canada are taxed only on employment income earned in Canada, income from a business carried on in Canada and income derived form the sale of “taxable Canadian property” (ie: generally speaking – real property)
It is sometime difficult to determine whether or not a person is resident in Canada yet the implications can be immense. The consequences of an incorrect determination can be severe. If a person moves away to another country for a few years and then returns to find that CRA demands Canadian tax returns for those years (with payment of tax on all worldwide earnings) the cost can be dramatic.
Fortunately there is a way to reduce the risk of this. A ruling can be obtained from CRA under which CRA offers a determination of residency status at the time of departure. Certain limitations apply. We can assist you with the ruling protocol and increase the chance of a favourable ruling.
Tax emigration gives rise, in certain circumstances to deemed dispositions. The cost of these and opportunities to post security in lieu of tax need to be canvassed.
We have experience in navigating and qualifying for the Overseas Employment Tax Credit.
The interpretation of the numerous Income Tax Conventions can be fraught with difficulties. They are there however, designed principally to avoid the imposition of double tax (i.e.: tax on income in two jurisdictions). Our office is skilled in the interpretation of these treaties and will assist you as needed.
How can we help?
To discuss how we can make a difference with your tax matter, contact our offices.